THE PROBLEMS OF FINANCING GOVERNMENT CORPORATIONS

(CASE STUDY OF TRACAS)

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ABSTRACT

This research paper is on the problems of financing government corporations (TRACAS CASE OF STUDY).

In carrying out the research, the researcher intends to find out the outlet to which commercial banks finance the activities of TRANSPORT COMPANY OF ANAMBRA STATE LIMITED, to ascertain whether the ability of TRACAS to meet debt repayment schedule of financiers militate against is availability of funds, to determine the extent to which the government of Anambra state have helped in financing the corporation.

The researcher collected data from both primary and secondary sources. Data collected was presented and analysed and hypothesis formulated was tested using the chi-square method of testing hypothesis.

The researcher found out the following insufficient finance from commercial banks has a significant effect on the activities of TRACAS;

Inability of TRACAS to meet debt repayment schedule of finances militate against the availability of funds from TRACAS; inability of funding TRACAS has a significant effect on as activities and performances; inability of government of Anambra state to finance TRACAS.

The following recommendation, were made government should try and provide enough fund to corporations through commercial banks. They need to act as their guarantor in searing the fund. The high interest changed is to be looked into to enable corporations to service their borrowed fund.

I suggest that if all these recommendations were properly implemented it will go a long way in improving the efficiency of corporations in this nation.

CHAPTER ONE

INTRODUCTION

Background of the study
Statement of the problem
Objectives of the study
Research Questions
Research hypothesis
Significance of the study
Scope and limitation of the study
Limitations
Definition of terms

CHAPTER TWO

REVIEW OF RELATED LITERATURE

Overview of government corporation finance
Government participation in public corporations
Rationale for public enterprises
Problems of public enterprises
Issue of financing government corporations
Characteristics of public corporation and their impact on their pricing policy and financial situation
Financial problems of public corporation
Commercial banks financing and interest rate.
Inadequate funding and its impact on corporations

CHAPTER THREE

RESEARCH METHODOLOGY

Research design
Population of the study
Sample and sampling technique
Sources of data
Method of data collection
Procedure for data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

A brief introduction of the chapter
Questionnaire / distribution
Presentation of data
Test of hypothesis
Interpretation of results

CHAPTER FIVE

FINDINGS RECOMMENDATION AND CONCLUSION

Findings

Conclusion

Recommendation

Bibliography

Questionnaires

CHAPTER ONE

INTRODUCTION

Public corporations are enterprises which are partly or wholly owned by the government, which private enterprises have been unable to take care of due to lack of adequate capital.

In any organization, there are so many components put together that make for an effective performance. One of these components is the fund. The problem that arises is the adequacy of the fund for effective other of the operations of an organization, through out its life time many organization which started well at the initial stage have failed by the wayside due to shortage of available funds.

Government have generally started playing a major role in economic development and in starting large enterprise in public sector. Many parastatals care into being when it was believed that rapid economic development required the state to table on the role of an enter premier. I should also be known that government movement in running public sector help in shaping its economy. Government ownership of these enterprises is to help improve its social and economic well being of her people and those amenities that the entrepreneurs cannot provide.

Public enterprise could be classified into four categories according to the degree of government participation in ownership and intervention in management. Firstly, governmental enterprises – composed of various government departments. Secondly government invested enterprises, where the government held at least 50% of the equity and appoint to management. Thirdly, subsidiary company of governmental invested enterprises which allow the government to invest indirectly through government invested enterprises and others. Lastly, governmental backed enterprises where the governmental holds less than 50% of the stock.

In developing nation there is a general believe that government should own and control enterprises due to insufficient capital on the side of these enterprises; and government gave majority control of than and appoint top management.

Over the past decades, the number and variety for public enterprises in developing countries have greatly expanded. In a developing country like Nigeria, the overall performance of these enterprises has been rather disappointing. They have supported staggering losses, thereby becoming a major drain on National budgets and the principal source of heavy external borrowing. They have equally purled to generate the expected job opportunities. Before independence, government establishments were the major employers of labour, but these days with many private enterprises set up by entrepreneurs more people have gained employment with these enterprises and this has reduced the dependence on government establishment and large firms for employment.

However, the followings have contributed to the poor performance and poor efficiency in these enterprises:

Obscure and sometimes conflicting managerial goals.
inadequate management accountability and autonomy
Excessive government interference in day to day management.
poor personnel and incentive systems
Complicated budgets and procurement processes.
inappropriate pricing and credit policies
Poor financing.

They have contributed to poor performances of public enterprises. The financing and management of these parastatals caused a serous problem in our economy. Its only very few government enterprises that are independent in the issue of financing, others solely depend on government. The fate is yearly tied on the national budgets because they are financed by way of grants, subsidies or loan from government. This equally means that if the government budget is delayed or cut down proposed expenditure, the funds of these enterprises will also be affected. This will determine their performance for that very year whether surplus or deficit is to be made.

BACKGROUND OF THE STUDY

The transport company of Anambra state limited (TRACAS) was launched on 12^th September 1988 by the military Governor of Anambra state co. Robert Nnaemeka Akonobi under the spices of the federal urban mass Transit programme (FUMTP). This programme is aimed at alleviating the transportation problem of the people which was occasioned by the dearth of computer vehicle (buses, cars).

To ensure that the traces are efficiently managed, the Anambra state government decided to privatize it, thus; TRACAS was incorporated on the 8^th December 1988. The Anambra state government has a 30% hold in TRACAS while remaining 70% will go to the public. Staff will also own shares in the company. The motto of the company is service and comfort.

LOGO

The TRACAS Logo is the map of Anambra state and a palm tree. The palm is a tree of immense economic value to the people of Anambra state palm wine, palm oil, palm kernel oil, etc are all products and by product of this tree, its significance in the economy of the state cannot therefore be looked over.

THE COMPANY’S FLEET

The transportation company of Anambra state ltd has a fleet of 200 vehicles as at the time of writing this project comprising the following.

Luxury buses
Mini buses
Station wagon cars
Small buses

SERVICES OFFERED

Tracas affers two types of services which are as follows:-

charter service
normal depot to depot service

DEPOT TO DEPOT SERVICES

This type of service are made up of

intra – city services
inter- city services

INTRA-CITY SERVICE

The intra-city service is in operation in Enugu and Onitsha. In Onitsha the company operates five routes. Each of these routes is depicted with a particular number/ colour for easy identification by commuters. In Enugu they operate only one route.

INTER-CITY SERVICE

Four major routes are operated on the inter-city service to major

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